Japan’s new series of banknotes marks its first anniversary on Thursday, but adoption has been slow, with fewer than 30% of all bills in circulation being the redesigned versions, according to Bank of Japan data.
Roughly 5 billion new banknotes were in circulation as of the end of May, accounting for just 28.8% of all bills in use. That’s less than half the pace seen during the last currency redesign in 2004, when new bills made up 61.1% of the total in the same time frame.
Still, the central bank says the rollout is proceeding smoothly and that the slow pace is within expectations. “There have been no major issues, and issuance is progressing steadily,” a BOJ official said.
Three main factors are contributing to the sluggish adoption, according to the BOJ. First is the sheer volume of currency in circulation. Around 11 billion banknotes were in use two decades ago, with the figure having risen to 1.5 times that now, driven in part by prolonged ultralow interest rates that have encouraged individuals and businesses to hold onto cash rather than spend or invest it.
That trend, known in Japan as tansu yokin, the equivalent of “cash under the mattress,” has created a backlog of older bills and slowed the transition.
Second is the nation’s accelerating move away from cash. A survey by the Ministry of Economy, Trade and Industry found that cashless payments — including credit cards, e-money and QR code-based transactions — represented 42.8% of all personal consumption in 2024, surpassing the 40% mark for the first time.
With fewer people using cash, demand for withdrawing bills from banks has declined over the past 20 years, dampening the pace of adoption.
A third reason, according to the BOJ, lies in the different context to 2004. That redesign was driven by a surge in counterfeit bills, which expedited the rapid replacement.
“This time, we’ve incorporated world-class anti-counterfeit technology, and we want people to feel confident using the new banknotes,” the BOJ said, encouraging more widespread adoption.
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